Knights Members and HSG compromise on audit date

BRETT KEEBLE12 Dec 2012, 11:30 p.m.

The Knights Members Club and Nathan Tinkler’s Hunter Sports Group agreed late last night to a compromise buying HSG more time to complete an audit and to extend the NRL club’s $20million bank guarantee.

Knights Members and HSG compromise on audit date

THE Knights Members Club and Nathan Tinkler’s Hunter Sports Group agreed late last night to a compromise buying HSG more time to complete an audit and to extend the NRL club’s $20million bank guarantee.

After a day of negotiations appeared headed for a stalemate to be resolved today, Knights chief executive Matt Gidley and members club chairman Nick Dan spoke at length last night and agreed to change key dates in the privatisation agreement signed on August 5 last year.

After those discussions last night, which ended shortly before 10pm, Gidley and Dan issued a joint statement, posted on the Knights website, saying they agreed to these amendments:

■ The $20million bank guarantee will be extended to January 31;

■ The audit covering the bank guarantee, junior development and sponsorship is to be completed by January 21;

■ The members club board will have from January 21 to 31 to discuss the auditor’s statement but any issues of concern are to be discussed by HSG and the members club as early as possible in the week beginning January 21.

Those key points were reported by the Herald yesterday after an agreement in principle was reached during discussions between Gidley, HSG representatives and Knights Members Club directors on Tuesday.

“We look forward to now allowing our sponsors and members to return their focus on supporting our club as we enter the much anticipated 2013 season,” Gidley said in the statement.

Dan said in the statement: “My fellow directors and I are pleased to reach an agreement.”

Speaking to the Herald, Gidley added: “I think everyone is pleased to have this finally settled now so we can move on and turn our attention back to where it should be, and that’s supporting our football team.”

According to the deed of sale signed on August 5 last year, HSG had to give the members club a statement from an auditor demonstrating HSG had upheld key components of that agreement.

These included providing $10million in sponsorship, sufficient working capital, and grants of $300,000 to the Newcastle Rugby League and $2.5million to junior development.

If those obligations were not met, the members club could draw on the bank guarantee to make good on those commitments, and HSG would be legally bound to top that up to restore the original amount of $20million.

If HSG does not provide an audit by an agreed date or top up the bank guarantee, the members club board is entitled to initiate a process to take control of the Knights and end Tinkler’s ownership of the rugby league club.

Under the terms of the initial agreement, that audit was due to be completed by Saturday.

As reported in the Herald last Saturday, HSG had sought to postpone that report to February 15 but the members club would not agree unless HSG extended until March the $20million bank guarantee that underpins Tinkler’s ownership agreement.

That guarantee was to have reverted to $10.3million on January 1 under the original deal but will now decrease on January 31.

According to the Knights, Gidley issued an interim report to the members club board last week saying HSG was “comfortably on track to hit the milestones for this calendar year, [including] an investment in junior development of approximately $500,000 more than required, with the Hunter Sports Group investing in excess of $3million to grassroots”.